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How Amazon Shredded the Netflix Red Envelope

Even that "old favorite" argument holds less water, as titles already in the disc library have a way of making it onto the streaming queue just out of convenience. It's the laziest thing in the world, but it's so easy. Would you rather sift through the racks and fiddle with the previews and commercials just to watch Mean Girls or Kill Bill again, or would you rather just stick those films on your streaming list and play them on whim? Lately, I've been going with the latter.

The final shove away from the envelope didn't come from Netflix at all, but from Amazon. The online retailer raised its spending threshold for free shipping from $25 to $35 and turned small splurges into serious, substantial orders. Amazon also raised the price of Prime from $79 per year to $99, but announced a deal with HBO that will make that channel's content available on cable-free streaming for the first time.

With Netflix's DVD service costing $8 a month, or $96 a year, and adding none of the residual value of Prime's two-day shipping or streaming content, the argument against dated discs and their red envelopes mounted. After Netflix announced that it would be boosting its own streaming rate to $9 a month for new subscribers (and for current ones two years down the road), the new $108-a-year cost only piled on to the argument against anachronism.

Basically, Netflix not only nudged my $96-a-year in DVD fees out of its pocket, but did absolutely nothing to prevent them from going to Amazon. Forget the fact that Amazon outmaneuvered it by luring in HBO and giving Prime members access to well-worn HBO content only available on disc or pay-per-view elsewhere: It made the effort. By design, Netflix's DVD service hasn't done that in quite some time.

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Listen, I'm not so fossilized that I'm unaware of Netflix's reasons for keeping its DVD-by-mail service alive. Much as Apple (AAPL - Get Report) will hang on to the iPod until the cost of production outweighs the demand, Netflix will gleefully keep taking DVD subscribers' money while it remains profitable to do so. It bolsters the streaming service, it helps pay for content acquisition and it's not really hurting anyone to keep it operational.

It's just not particularly relevant anymore and not alluring enough to cord cutters compared to a broadening library of streaming content. When it was the alternative to weekly trips to the video store, it was revolutionary. When it's just taking up time, money and patience that companies like Amazon, Verizon's Redbox Instant and others are actively pursuing with more accessible options, the Red Envelope is more of a burden than a benefit.

-- Written by Jason Notte in Portland, Ore.

>To contact the writer of this article, click here: Jason Notte.

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Jason Notte is a reporter for TheStreet. His writing has appeared in The New York Times, The Huffington Post,, Time Out New York, the Boston Herald, the Boston Phoenix, the Metro newspaper and the Colorado Springs Independent. He previously served as the political and global affairs editor for Metro U.S., layout editor for Boston Now, assistant news editor for the Herald News of West Paterson, N.J., editor of Go Out! Magazine in Hoboken, N.J., and copy editor and lifestyle editor at the Jersey Journal in Jersey City, N.J.
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